BRIC nations call for a new global financial order

10 Nov 2008

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Mumbai: The `BRIC' nations of Brazil, Russia, India and China have called for a major revamp of the current global financial system and have sought a rightful place for the four fastest growing economies in the world's financial system.

Finance ministers of the four major emerging powers, meeting at the Brazilian capital, Sao Paulo, ahead of the Group of 20 meeting this weekend, said the current crisis stemmed from the follies of rich countries.

They also took a common stand on reform of multilateral lending institutions like the International Monetary Fund and the World bank and on the efforts to deal with the current global financial crisis.

Brazilian finance minister Guido Mantega Speaking on the sidelines of the meeting, Brazilian finance minister Guido Mantega said the ''emerging countries are ready to shoulder the financial consequences of a bigger participation at the IMF," adding, ''There is no point in us increasing our participation if the big countries keep their veto powers."

The BRIC nations have decided to reinforce coordination in their efforts to deal with the international financial crisis, Mantega said, adding, they have shown ''a high level'' of unity in the diagnosis of the current financial crisis and the main measures to be taken.

The group also demanded immediate and urgent measures to ''restore access to credit in the real economy, to stimulate demand and give continuity to the capital flows to facilitate sustainable development and the growth,'' he said.

"We called for the reform of multilateral institutions in order that they reflect the structural changes in the world economy and the increasingly central role that emerging markets now play," finance ministers from the BRIC countries said in a joint statement after their meeting on Friday.

The US and other Western powers have called upon the emerging powers to play a bigger role in solving the present financial crisis, especially in addressing the problems of the smaller countries reeling under the impact of a credit crisis stemming from the sub prime credit crisis of US banks. But, without a reciprocal and equal redistribution of influence and authority, the BRIC nations are reluctant to assume major responsibilities.

A joint statement issued by the four countries also said the Financial Stability Forum, which groups the G7 and some other major economies, should be immediately expanded to include big emerging countries.

The show of unity came as finance ministers and central bankers began arriving in Sao Paulo for an annual meeting of the G20 group of the world's biggest economies which will be dominated by discussions of how to respond to the crisis.

The IMF voting shares of large emerging markets, including Brazil, India, China, Mexico and South Korea, were increased marginally in March, but they still have no influence on the decisions of the global lender.

The decisions taken at the G20 summit and a meeting of the Bank of International Settlements, both in Sao Paulo, would largely direct negotiations at the G20 heads of state summit in Washington on 14-15 November.

While the US administration of president George W. Bush have played down the prospect of any major changes, the European Union leaders have planed a united stand at the Washington summit behind a French-inspired plan for revamping the financial system.

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